EPA shocks carmakers and GOP by springing surprise decision

Source: Camille von Kaenel, E&E News reporter • Posted: Friday, December 2, 2016

U.S. EPA Administrator Gina McCarthy said she’ll “run, not walk” to the end of her term, faced with President-elect Donald Trump’s promises to roll back many of EPA’s greenhouse gas regulations.

Now she’s proving it.

The agency made a surprise proposal yesterday to maintain increasingly strict fuel economy standards for cars from 2022 to 2025. The key step in an ongoing midterm review came months before it was originally scheduled, shocking automakers, lawmakers and environmentalists.

Regulators have yet to finalize the decision. But it has already inflamed an increasingly fraught debate between carmakers and environmentalists over the feasibility of the tightening standards, which seek to cut the country’s dependence on foreign oil and limit greenhouse gas emissions.

Republican lawmakers immediately vowed to fight EPA’s under-the-wire announcement in Congress next year.

With the accelerated proposal, EPA is taking a decision that was previously expected to be made by Trump and is giving it to President Obama in the waning days of his administration to help strengthen his legacy on climate change.

The result could limit — but not eliminate — Trump’s options to weaken the standards.

Janet McCabe, acting chief of EPA’s Office of Air and Radiation, refused to say whether the timing of the decision was influenced by the election.

“There has been years’ worth of work to get us to this point, and it is the administrator’s view that this record was sufficient and compelling enough for her to indicate in this proposal that there isn’t a reason at this point to consider changing the standards,” she told reporters yesterday.

An extensive technical report released this summer by EPA found that automakers could continue to meet the standards with existing technologies at little cost.

McCabe did not say whether the intent was to finalize the decision by Jan. 20, when Trump takes office, but environmentalists believe that’s possible. The proposal now enters a 30-day comment period.

“It was the administrator’s call. … She’s not speaking to anything a future administration might or might not do,” said McCabe.

The rules require EPA regulators to decide by April 2018 whether to increase, decrease or maintain the 2025 standards. As late as this June, McCarthy told House Republicans that EPA anticipated the proposed determination would be issued in 2017.

The fuel economy rules are the government’s most substantive policy to tackle continually increasing greenhouse gas emissions from transportation, which surpassed the power sector as the country’s top emitter this year. Carmakers have met the standards, or beaten them, every year so far, but they say the tightening targets are making it difficult for manufacturers. They petitioned for relief.

‘Extraordinary rush to judgment’

Yesterday’s announcement enraged automakers and Republican lawmakers. They said the accelerated timeline does not give regulators enough time to make an informed decision.

“This has become another administrative avenue for President Obama to force his climate ideologies on American businesses and consumers that undermines global competitiveness and will hurt the country’s long-term economic potential,” Sen. Jim Inhofe (R-Okla.) said in a statement. “I look forward to working in the next Congress with the new administration to pare back all of the legacy saving regulatory actions this administration will continue to advance as their January 20th deadline approaches.”

House Republicans on the Energy and Commerce Committee, including Chairman Fred Upton of Michigan and Michael Burgess and Pete Olson of Texas, said the “complicated and onerous standards were rushed through at the 11th hour.”

“This action is completely unnecessary and will have grave consequences on jobs and manufacturing,” they said in a statement.

The Association of Global Automakers called it “disappointing.” And the Alliance of Automobile Manufacturers called it a “premature and extraordinary rush to judgment.”

In a November petition, the trade group had asked Trump for a complete review of any actions EPA made since September in anticipation of this possibility. It also asked for tweaks that would weaken the standards, sending stocks soaring for automakers like General Motors Co. and Fiat Chrysler Automobiles.

Even environmentalists did not anticipate the early proposal. Sen. Ed Markey (D-Mass.) called the proposal a “holiday-season gift” in a statement released minutes after EPA’s announcement.

“We were hopeful they would be able to do something, though we thought it would be a heavy lift,” said Andrew Linhardt, who advocates on federal transportation issues for the Sierra Club. Days after the election, he had called on EPA to accelerate its decisions on the fuel economy rules.

“For us, there’s certainly urgency in making sure as many things are as final as possible and solidifying the gains for the climate,” he said. “I’m pleasantly surprised.”

A technical report released earlier this year found that automakers could meet the standards through 2025, though some of the emission benefits would be offset by consumer preferences for trucks and SUVs in a period of low gas prices. EPA officials yesterday said that finding supported an increase in the standards, which would have required a new rulemaking. But they decided against it because that would create regulatory uncertainty for automakers.

EPA on its own

The decision could make it slightly more difficult for Trump to weaken the rules.

If EPA had determined that the standards should be increased, that would have triggered a new rulemaking process that is vulnerable to the agenda of the next administration. The final determination, by contrast, is not subject to the Congressional Review Act because it is not a rule. Trump could look to reverse that determination but would need to offer significant new evidence to overcome legal challenges by environmentalists and California regulators.

Trump could also weaken the standards through legislation or agency tweaks to the rules’ design. A Transportation Department spokesman said yesterday the agency would officially consider the automakers’ requests for changes.

Yesterday’s announcement also marks a split between EPA and the National Highway Traffic Safety Administration, which sets fuel economy rules under a different legal authority.

The midterm review requires EPA to determine whether to increase or loosen the existing greenhouse gas emission standards from 2022 to 2025 and requires NHTSA to set its own fuel economy standards for 2022-25.

Yet NHTSA did not issue a proposed notice of rulemaking. Inhofe and automakers slammed it as a sign of poor coordination between the agencies. Neither EPA nor NHTSA offered an explanation for the difference in timing. They have worked closely together on the underlying technical analysis but are not required to issue rules at the same time. McCabe said NHTSA would take EPA’s decisions into account when setting its rules.

“DOT looks forward to further stakeholder feedback … in advance of developing its upcoming notice of proposed rulemaking for future CAFE [Corporate Average Fuel Economy] standards,” Clark Pettig, a spokesperson for the Transportation Department, said in a statement.

A spokesman added that NHTSA’s proposed rulemaking would not come before Jan. 20.